Will you give commercial tenants a rent holiday?

Quick question for the minds on here that own commercial property, particularly with hospitality, tourism etc tenants.

Will you wait and see whether the bank will give you a mortgage holiday first?

 

I don't need a mortgage holiday as we owe very little. Even if you received a mortgage holiday it would only be a deferment.

I would consider deferring or reducing rent but only in line with what I asses the tenant could subsequently catch up on.

 

If the tenant comes to us it may be an opportunity to amend the lease to obtain better terms.
I assume the hotel (as an example) would show us the occupancy rate.
The other senario we need to look at is whether it is better to have a default and re-sell the hotel to a better operator.
The next operator will have substantially less debt so will be more profitable.
Cross that bridge when it happens!

 

I had a client drop the rent of a commercial property by 25%, just because the tenant asked - I said he was crazy.

 

Interesting. I'm talking about straight up forgiving the rent for a period of 3 months or so.

It's not really a hypothetical, Feds and states are looking into it now. Personally our Cafe business has dropped 90% in a week and we'll be closed as of Monday as all our surrounding businesses are shut or working from home.

It will be a real thing if you are a landlord of a Hospitality or Tourism tenant, or any of the flow on businesses.

 

Terry in my younger days each Tenant's rental was vital to paying the mortgage.
We could never take a risk of losing a tenant ... luckily those days are gone (will I hope so :-( or else I am in trouble )

 

Our most significant commercial property has a tenant who sells gym equipment.
Sales have increased 5x almost overnight.
The other is a medical center, which I don’t believe would be struggling either.
Definitely no rental easing for either, but I do feel for the other industries more prone to risk in times like this.

 

Completely fair enough, and it wouldn't be right for either of those tenants to take advantage of the situation to gain at your loss. More specifically talking Hospo and Tourism tenants.

 

I've given 3 different tenants half rent for 2 months. All my guys are in the CBD - imagine the hit with offices shut and tourists banned.

Separately, I had to cut rent by 15% in a HK place.

Our landlord (we are also tenants in other premises) has suggested rent is reduced to 15% of our revenue.

 

Yeah I don't need to imagine!

We are down 90% revenue from Monday to today, and we expect it to fall further. It's already costing us hundreds in wages a day to keep the staff on. We are trying a last ditch marketing attempt at local apartments and then will have to close M-F and maybe completely.

Edit: We also have a co-tenant above us who sub leases a small space from us, in the tourism industry. They have given $2 million in refunds in 2 days and have 0 income coming in, with staff still on the books, so are in the same boat as us.

 

Fifteen percent decrease sounds good to me .
I have been vacant in HK for three month now :-(
But the three month HK term deposits are at the highest I seen for many ,many years of 1.69%

 

Ye was an industrial flat. I still have an empty resi flat... I don't even bother to get agent in because who knows who has virus

I just had a friend rent Belcher for $34k. 2 months ago was $37k/month

 

Yea that's unfortunate to hear. I am fortunate because my tenants have a lease and a bond. My landlord is less fortunate as one of our major sites is just off a lease.

 

We’re giving our tenants some relief but still working out exactly what that will look like ie percentage discount / period etc.

 

You realise that any form of relief you voluntarily give now might be around for years, right?

I will only give any rental relief if I can see serious hardship in tenants, given that I will end up in hardship if I was to give it to everyone straight away.

Plus why am I expected to have reserves that last me longer than my tenants?

 

Two shops in Australia. The big one is rented to a medical imaging company so no rent reduction. The small one (the size is about 1/5 of the big one) is vacant since last year as I am adding a substation next to it. I hoped to rent it out quickly but now don't think I can rent it out in the near future...

Three shops in Hong Kong and they all requested about 30% rent reduction.

 

I had discussions in-house last week about the issues and possible actions.

This will be on a case by case basis, tenants are wholesalers, involved in food or construction industries.

The foodies are booming due to current market demand issues however some of their businesses are suppliers to restaurants and also being importers will feel the effect of the falling AUD.

 

Why would the relief last for years??

I’m talking about a, say, 25% discount for 3 or 6 months, then it reverts to normal rent levels.

 

New leases struck at lower rates will last until pressures on accommodation build causing rents to rise.

 

This isn’t a new lease though?